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What to expect from a financial advisor

NAIROBI, Kenya, Aug 26 – Whatever your long-term financial objectives are, you need a financial advisor. Your financial adviser needs to be an expert in financial products. They also need to know which product is suitable for each need how the products work and their comparative costs.

Most important is the advisor needs to understand the risk, including reward profiles of the different forms of investment and how different profiles relate to the needs of different people. They also need to know the tax treatment of the contributions and advantages of each form of benefit.

The wide range of detailed knowledge equips advisers to fulfill their role. Their key functions are to help people identify their financial planning needs, their present priorities and the products that are most suitable to meet their needs.

The first role of the adviser is to establish contact with the prospective client. At times a financial adviser will approach you while at times you will make the effort to look for one when you need the advice.

The adviser’s second role is to collect substantial details on your current financial situation and your financial aims and objectives for the future. With this information, the adviser can select for you the most suitable products. It is the adviser’s role to see that you understand your real needs and to persuade you to give these real needs a priority.

As part of the fact finding process, the adviser needs to identify your risk profile. That is to what extent can you afford to take investment risks that may lose some of your money if you are forced to cash in your investments early? Some people can afford to take this risk in the hope of securing higher potential returns, while others cannot.

With detailed information on your affairs, objectives, and wishes, the adviser now has to prepare a recommendation for you. For each need, the adviser identifies all financial products that could be used to meet the need. The costs, benefits and balance of advantages and disadvantages need to be set out in detail for each product recommended.

Once the adviser has completed a set of recommendations, they should be presented to the client.  For each need, the benefits, costs and key features need to be well explained.  The presentation needs to be honest and motivating so that you are genuinely committed to those needs and their continuing costs before you take out the financial products the adviser recommends. Although it is the adviser’s duty to base recommendations on the real needs, only you have the right to buy products that satisfy your perceived needs.

Finally, the presentation is completed. The adviser should be competent enough to answer your questions and clear your doubts. Irrespective of your decision, the adviser has a continuing duty. If you choose to go ahead, they should assist in filling all the paperwork.

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Once you take up the product, the adviser owes you duty of care. It is their responsibility to provide continuing service on a regular basis. The adviser also needs to make regular reviews of your financial needs in order to adapt the financial plans to changes in your life with time.

Simply said the financial adviser has a most important and demanding role. It is mandatory that they have great knowledge and understanding of complex technical factors and considerable communication skills to identify your real needs and to commit you to taking necessary action. It is important to have a financial adviser who puts your needs before theirs.

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